As people near or reach retirement, many consider how to cut expenses while maintaining their current quality of life. Some get pensions, though most rely on Social Security and retirement investments to fuel their life after the paychecks stop. One of the first considerations is housing, and condo living is quite a popular draw for people over 50.
It’s less expensive, more compact, and has fewer yard work and maintenance requirements. Instead of just saving money, consider the fact that it makes financial sense to invest in condos, as well.
Choosing one or more condos as investment properties as you near retirement age might seem like too much risk to take on at that time of life. Yes, careful research is needed to maximize your returns, but condo investing is also less risky than other types of real estate opportunities for various reasons.
If you need to get a home loan to purchase a new condo, make sure you understand the financial impact before you proceed.
The Benefits of Investing in condos
Condos usually cost less than single-family homes in the same area, which allows people over 50 to risk less of their nest egg. Buying a condo in an existing community gives you detailed information about its track record for resale prices, property value overall, and tenant payments.
Unlike separate homes, all the maintenance is taken care of by the property owner or management company. From a financial standpoint, condos in popular areas sell quickly and with possibly less marketing than a single home.
The community often sells itself due to the shared amenities available. Holding them as rental properties gives you an ongoing, nearly passive income that can last throughout retirement.
Questions to ask before you choose a condo for investing
Is this the right location to invest in? Location remains one of the most important factors when buying real estate either to flip or rent out. Look for community growth, employment opportunities nearby, quality of the schools, and other benefits that will make people move into the area.
Also, check out the condominium complex itself to make sure residents and renters are satisfied with living there.
Should I invest in existing or pre-construction communities? If you purchase an existing condo property, you know exactly what you are getting, how much rent is currently paid, and the expectations of future raises.
The track record of a particular property and, if occupied, the tenants, can help you make the decision more easily. On the other hand, it makes financial sense to invest in condos before they are built as this lets you get in on a potentially lucrative deal that can only grow over time. However, more risk is involved, and you will have to wait until construction is complete to begin making returns.
Do I want to flip condos or become a landlord? These two methods of investing in condos as you near or reach retirement age both come with pros and cons. Buying to resell requires organizing some repairs or renovations and then marketing the property to a new buyer.
Buying to rent the condos out will bring ongoing income, but potential headaches you may not want to have during your senior years. In the end, the decision is up to you and your financial situation.